ACIT, Circle-16(1), Hyderabad, Hyderabad V. Madhusudan Rao Lagadapati, Hyderabad, Hyderabad

ITA 449/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5461 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 12-08-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 08-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Additional evidence; Set aside
• Section: 69C; 143(3); 5(2); 69A; 68; 69

Judgement Text

ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.449/HYD/2017 ASSESSMENT YEAR: 2012-13 A.C.I.T. CIRCLE 16(1) HYDERABAD VS. SHRI MADHUSUDAN RAO LAGADAPATI, HYDERABAD PAN:ABCPL8904D (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY : SRI Y.V.S.T. SAI, DR DATE OF HEARING: 12/08/2021 DATE OF PRONOUNCEMENT: 14/09/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2012-13 AGAINS T THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 1.12.2 016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL FILED HIS RETURN OF INCOME FOR THE A.Y 2012-13 ON 2 8.7.2012 ADMITTING TOTAL INCOME OF RS.3,77,57,400/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A SSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RECEIVED SOM E AMOUNTS FROM HIS NRI A/C AND ALSO FROM M/S. VIRTUAL INTERNA TIONAL LTD (VIL), MAURITIUS. HE WAS NOT SATISFIED ABOUT THE GE NUINENESS OF THE TRANSACTION AND THE IDENTITY AND CREDITWORTHINE SS OF M/S.VIL. HE THEREFORE, TREATED IT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 2 OF 9 APPEAL BEFORE THE CIT (A) WHO GRANTED RELIEF TO THE ASSESSEE AND THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE RELIEF GRANTED BY THE CIT (A). THE GROUNDS OF APPEAL RAISE D BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A), ERRED IN DELETING THE ADDITION MADE OF RS. 62,83,02,500/- U/S 68. 2. THE LD. CIT(A), ERRED IN HOLDING THAT THE CREDIT WORTHINESS OF THE LENDER COMPANY IS PROVED. 3. THE LD. CIT(A), ERRED IN ACCEPTING THE GENUINENE SS OF THE TRANSACT-ON. 4. THE LD. CIT(A), ERRED IN HOLDING THAT DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF M/S VODAFONE INTERNATIONAL HOLDING (341 ITRI) IS WRONG}. APPLIED TO ME PRESENT CASE. 5. THE LD.CIT(A), ERRED IN HOLDING THAT LOAN TAKEN BY THE ASSESSEE FROM M/S.VIL MAURITIUS IS THE 'SOURCE OF T HE SOURCE' INSTEAD OF CONSIDERING IT AS FIRST SOURCE O F INVESTMENT AS THE AMOUNT REMITTED IN BARCLAYS BANK MAURITIUS IS FOR THE MERE PURPOSE OF TRANSFER OF TH E AMOUNT FROM ONE ACCOUNT TO THE OTHER ACCOUNT OF THE SAME P ERSON AND THE AMOUNT AVAILABLE IN THE SAID BANK ACCOUNT I S NOT A SOURCE OF INVESTMENT. 6. THE LD.C1T(A), ERRED IN RELYING ON THE DECISIONS OF ITAT DELHI AND CHENNAI IN THE CASES OF M/S FINALLY CORPORATION(86LTD626) DELHI AND SUSILA RAMASWAMI (0 08 ITR18) CHENNAI WITHOUT TAKING INTO CONSIDERATION TH E RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAND HANIF (50 ITR1) TO THE EFFECT THAT T HE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY THE ASSESSEE IS ON THE ASSESSEE ON LY AND IF HE DISPUTES HIS LIABILITY FOR TAX, IT IS FOR HIM TO SHOW EITHER THAT THE RECEIPT WAS NOT INCOME OR THAT IF IT IS IN COME, THE SAME IS EXEMPT FROM TAXATION UNDER THE PROVISIONS O F THE ACT. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) -4 HYDERABAD, ON THE ABOVE GROUNDS BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 3 OF 9 3. AT THE TIME OF HEARING, WHILE THE LEARNED DR SUP PORTED THE ORDERS OF THE ASSESSING OFFICER, THE LEARNED CO UNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT (A) AND SUB MITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EA RLIER A.YS AND THE CIT (A) HAS GRANTED RELIEF TO THE ASSESSEE BY F OLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE. THE LE ARNED DR, COULD NOT REBUT THIS ARGUMENT OF THE ASSESSEE. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE A.Y. 2011-12 IN ITA NO.1482/HYD/2014, DATED 18.3.20 15. FOR THE SAKE OF READY REFERENCE, RELEVANT PARAS ARE REPRODU CED HEREUNDER: 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUS ED THE DOCUMENTS PLACED ON RECORD AND THE ORDERS OF THE AUTHORITIES. FIRST OF ALL WE ARE UNABLE TO UNDERSTAND HOW ASSESSING OFFICER CAN CONS IDER INWARD REMITTANCE OF MONEYS INTO NRI A/C OF A NON-RESIDENT INDIAN AS INCOME OF ASSESSEE AS UNEXPLAINED. ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS FURNISHED ENOUGH EVIDENCES IN SUPPORT OF INWARD REM ITTANCE OF FUNDS INCLUDING A CERTIFICATE FROM M/S.VITRUAL INTERNATIO NAL LTD., ABOUT THE SOURCE OF FUNDS BEING LOAN. IF ASSESSING OFFICER HA S ANY DOUBT ABOUT THE SAID COMPANY IN MAURITIUS, HE CANNOT REJECT THE GEN UINENESS OF THE SAID COMPANY WITHOUT MAKING NECESSARY ENQUIRIES EITHER T HROUGH THE INTERNAL MECHANISM OF FOREIGN TAX DIVISION OF CBDT OR BY ANY OTHER MEANS. JUST BECAUSE THE CERTIFICATE FURNISHED DOES NOT HAVE ANY SEAL, THE SAME CANNOT BE REJECTED OUTRIGHT. HOWEVER, THE MATTER DID NOT E ND THERE. ASSESSING OFFICER TOOK PAINS TO VERIFY FROM THE INTERNET AND ALSO FROM THE WEBSITE OF THE SEBI AND CAME TO THE CONCLUSION THAT THE SAID C OMPANY IS ONE OF THE GROUP COMPANIES OF ASSESSEE LISTED AS PERSONS CONST ITUTING GROUP UNDER MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 196 9 AND FURTHER NOTICED FROM THE RED HERRING PROSPECTUS OF M/S.LANCO INFRAT ECH LIMITED, WHEREIN THIS COMPANY WAS SHOWN AS SINGLE SHAREHOLDER COMPAN Y OF ASSESSEE AS ON 29-07-2006. THIS MEANS THE EXISTENCE OF THE COMPANY IS ACCEPTED BY THE AUTHORITIES, NOT ONLY BY SEBI AND OTHER STATUTORY A UTHORITIES BUT EVEN BY THE ASSESSING OFFICER, AS CAN BE SEEN FROM THE ENQU IRIES CONDUCTED. WE ARE UNABLE TO UNDERSTAND HOW THE REVENUE COULD RAISE GR OUND ON EXISTENCE OF THE ABOVE COMPANY IN GROUND NO.7 ABOUT THE IDENTITY OF THE COMPANY WHEN ASSESSING OFFICER HIMSELF ACKNOWLEDGED THE SAM E IN THE ASSESSMENT ORDER. ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 4 OF 9 11. COMING TO THE CREDITWORTHINESS OF THE AMOUNT, A SSESSEE'S EXPLANATION IS THAT THE AMOUNTS WERE TRANSFERRED FROM HIS OWN B ANK ACCOUNT IN MAURITIUS TO THE NRI ACCOUNT IN INDIA. THEREFORE, T HE IMMEDIATE SOURCE OF FUNDS IS HIS OWN ACCOUNT FROM MAURITIUS WHICH IS NO T DISPUTED. IF FUNDS ARE RECEIVED INTO MAURITIUS ACCOUNT, THEN THAT BECOMES SOURCE OF THE SOURCE WHICH CANNOT BE EXAMINED BY ASSESSING OFFICER, UNLE SS THERE IS ANY INCRIMINATING EVIDENCE. EXCEPT PRESUMPTIONS AND ALL EGATIONS, VIRTUALLY THERE IS NO EVIDENCE AGAINST ASSESSEE THAT THESE FU NDS RECEIVED INTO HIS BANK ACCOUNT IN MAURITIUS ARE HIS OWN INCOMES FROM INDIA OR 'ROUND TRIP' FUNDS OF ASSESSEE AS ALLEGED. THEREFORE, ALL THE GR OUNDS RAISED ON THIS ISSUE, PARTICULARLY GROUND NO.10 & 11 DOES NOT REQU IRE ANY CONSIDERATION ON THE FACTS OF THE CASE. 12. COMING TO THE ISSUE OF CREDITWORTHINESS OF THE ABOVE SAID COMPANY, THERE IS NO DISPUTE WITH REFERENCE TO THE FUNDS. IT HAS ITS OWN FUNDS AND LD.CIT(A) TOOK PAINS TO EXAMINE AND HOLD THAT IT IS CREDITWORTHY. NOTHING WAS BROUGHT ON RECORD TO COUNTER THE FINDINGS OF LD .CIT(A), EXCEPT CONTENDING THAT THE ORDER OF THE CIT(A) IS NOT CORR ECT. THEREFORE, THE GROUND REGARDING CREDITWORTHINESS OF THE COMPANY PA RTICULARLY FROM GROUND NO.6 TO 10 ALSO DOES NOT REQUIRE ANY CONSIDE RATION. 13. ONE OF THE ISSUES TO BE CONSIDERED IS WHETHER T HE ADMISSION OF ADDITIONAL EVIDENCE BY ASSESSEE AT THE DIRECTIONS O F CIT(A) REQUIRED TO BE SENT TO ASSESSING OFFICER UNDER RULE 46A(1). IT IS NOT ASSESSEE WHO FURNISHED THE ADDITIONAL EVIDENCE. THEREFORE, IT CA NNOT BE STRICTLY CONSIDERED AS ADDITIONAL EVIDENCE UNDER RULE 46A. C IT HAS CO-TERMINUS POWERS AS THAT OF ASSESSING OFFICER AS FAR AS APPEA LS BEFORE HIM ARE CONCERNED. IN FACT, HE EVEN HAD ENHANCEMENT POWERS, IF ASSESSING OFFICER HAS MISSED OUT BRINGING INTO TAX ANY AMOUNTS. HE AL SO HAS POWERS OF ENQUIRY AND INVESTIGATION. THEREFORE, THE CIT(A) IF EXERCISES HIS POWERS AS AN ASSESSING OFFICER, THERE IS NO NEED TO GIVE AN O PPORTUNITY TO THE ASSESSING OFFICER WHO PASSED THE ASSESSMENT ORDER U NDER RULE 46A. THE ACTION OF THE CIT(A) IS COMPLETELY JUSTIFIED AND IS IN LINE WITH THE JUDICIAL PRONOUNCEMENTS IN DCIT CIRCLE-16(1), HYDERABAD VS. NE TECHNOLOGIES INDIA (P) LTD., [47 TAXMANN.COM, 405 (HYDERABAD- TR IB)] AND ITO VS. INDUSTRIAL ROAD WAYS [112 ITD 293 (MUMBAI-TRIB)]. I N THE CASE OF ITO VS. INDUSTRIAL ROAD WAYS (SUPRA), THE CO-ORDINATE B ENCH HAS HELD AS UNDER: 'HAVING REGARD TO THE PROVISIONS OF PART A OF CHAPT ER XX RELATING TO THE APPEALS BEFORE THE FIRST APPELLATE AUTHORITY, A DIS TINCTION HAS TO BE MADE BETWEEN THE EVIDENCE AND MATERIAL VOLUNTARILY FURNI SHED BY AN ASSESSEE IN SUPPORT OF HIS APPEAL AND THE EVIDENCE/MATERIAL REQ UISITIONED FROM AN ASSESSEE BY THE FIRST APPELLATE AUTHORITY WITH A VI EW TO HAVE PROPER DISPOSAL OF PROCEEDINGS BEFORE HIM. WHILE THE PROVISIONS OF RULE 46A APPLY TO THE FORMER, THE SAME HAVE NO APPLICATION TO THE LATTER. {PARA 4] PROVISION OF RULE 46A ENJOINS UPON THE FIRST APPELLATE AUTHORITY NOT TO ADMIT ANY FRESH EVIDENCE UNLESS HE RECORDS IN WRITING HIS REASONS F OR ITS ADMISSION. FURTHER, RULE 46A ENJOINS UPON HIM TO PROVIDE THE ASSESSING OFFICER WITH A REASONABLE OPPORTUNITY TO EXAMINE THE FRESH EVIDENC E OR TO CROSS EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE OR TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS ILL REBUTTAL OF THE ADDITIO NAL EVIDENCE PRODUCED BY THE ASSESSEE. ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 5 OF 9 {PARA 5} THE PROVISIONS OF SECTION 250(4) , ON THE OTHER HAND, EMPOWER THE FIRST APPELLATE AUTHORITY TO MAKE SUCH FURTHER ENQU IRY AS HE THINKS FIT OR TO DIRECT THE ASSESSING OFFICER TO MAKE FURTHER ENQUIR Y AND REPORT THE RESULT OF THE SAME. THERE ARE MANY JUDGMENTS TO THE EFFECT THAT IN VIEW OF THE PROVISIONS OF SECTION 250(4) , THE FIRST APPELLATE AUTHORITY IS DUTY BOUND TO MAKE AN ENQUIRY EVEN IF SUCH AN ENQUIRY WAS NOT MAD E BY THE ASSESSING OFFICER IF THE FACTS AND CIRCUMSTANCES OF THE CASE WARRANT SUCH AN ENQUIRY TO BE MADE. IT, THEREFORE, FOLLOWS THAT THE MATTERS TO BE CONSIDERED BY THE FIRST APPELLATE AUTHORITY NEED NOT BE CONFINED TO W HAT WAS CONSIDERED BY THE ASSESSING OFFICER WHILE MAKING THE ORDER APPEAL ED AGAINST. {PARA 6] THERE ARE OF COURSE SEVERAL JUDGMENTS WHERE IT HAS CLEARLY BEEN LAID DOWN THAT THE ASSESSEE ON HIS OWN CANNOT PRODUCE ANY ADD ITIONAL EVIDENCE NOT FURNISHED BEFORE THE ASSESSING OFFICER WITHOUT MEET ING THE VARIOUS CONDITIONS PROVIDED UNDER RULE 46A FOR WHICH SATISF ACTION IS TO BE RECORDED BY THE APPELLATE AUTHORITY IN WRITING AND WITH WHIC H THE APPELLATE AUTHORITY IS FURTHER REQUIRED TO CONFRONT THE ASSESSING OFFIC ER AND ALLOW HIM A REASONABLE OPPORTUNITY TO HAVE HIS SAY IN THE MATTE R. [PARA 9] FROM THE VARIOUS AUTHORITIES OF COURTS, THE LEGAL POSITION I S THAT THE FIRST APPELLATE AUTHORITY HAS WIDE POWERS OVER THE ORDER OF ASSESSM ENT APPEALED AGAINST BEFORE HIM. IN THE COURSE OF EXERCISE OF SUCH POWER THE FIRST APPELLATE AUTHORITY CAN DIRECT THE ASSESSEE TO PRODUCE ANY EV IDENCE, INFORMATION OR MATERIAL THAT WAS NOT PRODUCED BEFORE OR WAS NOT CO NSIDERED BY THE ASSESSING OFFICER. THE PURPOSE OF RULE 46A IS TO PLACE FETTERS ON THE RIGHTS OF AN APPELLANT TO PRODUCE ADDITIONAL EVIDENCE BEFORE THE FIRST APPELL ATE AUTHORITY AND NOT ON THE RIGHTS OF THE FIRST APPELLATE AUTHORITY TO CALL FOR PRODUCTION OF ANY FRESH EVIDENCE OR INFORMATION. THIS ASPECT OF THE PROVISI ONS OF RULE 46A IS CLEAR FROM THE PROVISIONS OF SUB-RULE (4) OF RULE 46A ITS ELF THAT NOTHING CONTAINED IN RULE 46A SHALL AFFECT THE POWER OF THE FIRST APP ELLATE AUTHORITY TO DIRECT THE PRODUCTION OF ANY DOCUMENT OR TO EXAMINE ANY WI TNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTI AL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER O N HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER).[(PARA 13] IN THE INSTANT CASE, THE ENTIRE ADDITIONAL EVIDENCE HAD COME ON THE RECORD O F THE COMMISSIONER (APPEALS) BECAUSE HE HAD DECIDED TO EXAMINE THE FAC TS OF THE CASE IN DEPTH AND THEN ADJUDICATE UPON THE MATTER ON THE BASIS OF EVIDENCE AND MATERIAL, THUS, GATHERED. THE COMMISSIONER (APPEALS) WAS EMPO WERED TO DO SO UNDER THE PROVISIONS OF SECTION 250(4) . THE RESULT OF ENQUIRY CONDUCTED BY HIM COULD EITHER GO TO FURTHER CEMENT THE CASE MADE OUT BY THE ASSESSING OFFICER OR TO HELP OUT THE ASSESSEE AGAINST THE FIN DINGS OF THE ASSESSING OFFICER. THE MERE FACT THAT THE RESULTS OF THE ENQU IRIES THUS CONDUCTED SUPPORTED THE CASE OF THE ASSESSEE AND NOT THAT OF THE REVENUE, IT HAS NO BEARING ON THE JURISDICTION AND POWERS OF THE COMMI SSIONER (APPEALS). THE COMMISSIONER (APPEALS) COULD HAVE CONFRONTED TH E ASSESSING OFFICER WITH THE EVIDENCE THUS RECEIVED AND THE MATERIAL TH US GATHERED AND ALLOWED THE ASSESSING OFFICER TO HAVE HIS SAY IN THE MATTER AND PERHAPS HAD HE DONE SO THE DISPUTE IN QUESTION WOULD NOT HAVE ARIS EN. BUT THERE IS NO REQUIREMENT, IN LAW, THAT THE COMMISSIONER (APPEALS ) SHOULD INVARIABLY CONSULT OR CONFRONT THE ASSESSING OFFICER EVERY TIM E AN ADDITIONAL EVIDENCE THAT WAS NOT BEFORE THE ASSESSING OFFICER COMES ON THE RECORD OF THE COMMISSIONER (APPEALS). WHERE THE ADDITIONAL EV IDENCE IS OBTAINED BY THE FIRST APPELLATE AUTHORITY ON ITS OWN MOTION, TH ERE IS NO REQUIREMENT, IN LAW, TO CONSULT/CONFRONT THE ASSESSING OFFICER WITH SUCH ADDITIONAL EVIDENCE. THERE MAY BE CASES WHERE ADDITIONAL EVIDE NCE IS ADMITTED BY THE ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 6 OF 9 FIRST APPELLATE AUTHORITY ON A REQUEST OR APPLICATI ON MADE BY THE ASSESSEE. IN SUCH CASES SUB-RULE (2) OF RULE 46A REQUIRES THE FIRST APPELLATE AUTHORITY TO ALLOW THE ASSESSING OFFICER A FURTHER OPPORTUNIT Y TO REBUT THE FRESH EVIDENCE FILED BY THE ASSESSEE. EVEN THAT REQUIREME NT CANNOT BE SAID TO BE A RULE OF UNIVERSAL APPLICATION. IF THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY IS IN THE NATURE OF A CLINCHING EVIDENCE LEAVING NO FURTHER ROOM FOR ANY DOUBT OR C ONTROVERSY, IN SUCH A CASE NO USEFUL PURPOSE WOULD BE SERVED BY PERFORMIN G THE RITUAL OF FORWARDING THE EVIDENCE/MATERIAL TO THE ASSESSING O FFICER TO OBTAIN HIS REPORT. IN SUCH EXCEPTIONAL CIRCUMSTANCES THE REQUI REMENT OF SUB-RULE (3) MAY BE DISPENSED WITH. [PARA 14] THEREFORE, THERE W AS NO INFIRMITY IN THE IMPUGNED ORDER OF THE COMMISSIONER (APPEALS) WHO HA D TAKEN PAINS TO COMPREHENSIVELY EXAMINE THE ISSUE BEFORE HIM AND AR RIVE AT A CORRECT FINDING OF FACT AND HE SHOULD BE CONGRATULATED FOR HAVING DONE SO. THEREFORE, HIS ORDER WAS TO BE UPHELD AND THE APPEA LS WERE TO BE DISMISSED. [PARA 15]. 14. IN THIS CASE CIT(A) REQUISITIONED THE EVIDENCE TO EXAMINE THE CONTENTIONS. THEREFORE, THE GROUNDS RAISED FROM GRO UND NO.3 TO 6 ON THE ISSUE OF ADDITIONAL EVIDENCE ARE INFRUCTUOUS AND DO ES NOT REQUIRE ANY CONSIDERATION. 15. THEREFORE, ON THE FACTS OF THE CASE, IT IS TO B E ADMITTED THAT ASSESSEE HAVING HIS OWN FUNDS ABROAD HAS REMITTED T HE AMOUNT TO INDIA AND THIS INWARD REMITTANCE CANNOT BE CONSIDERED AS UNACCOUNTED INCOME OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 16. REVENUE HAS RAISED VARIOUS GROUNDS ON THE LEGAL PRINCIPLES. WE ARE OF THE OPINION THAT THESE ARE ALL MISPLACED OR WRONGLY APPLIED TO THE FACTS OF THE CASE. FIRST OF ALL, ASSESSEE BEING A NON-RESIDE NT INVOKING THE PROVISIONS OF SECTION 68 & 69 HAS ITS OWN LIMITATIONS. EVEN THOUGH, THE CREDITS ARE TO BE EXAMINED U/S.68 AND 69, 69A OR 69C PRIMA FACIE T HESE SECTIONS ARE NOT APPLICABLE IN THE CASE OF ASSESSEE FOR THE FOLLOWIN G REASONS. SECTION EXPLANATION FOR NON APPLICABILITY OF SECTION 68 : UNEXPLAINED THE ASSESSEE HAS MERELY TRANSFERRED HIS OWN CASH CREDIT MONEY FROM HIS ACCOUNT IN BARCLAYS BANK, MAURITIUS TO NRI A/C HELD IN AXIS BANK AND INDUSIND BANK. AS HE TRANSFERRED THE AMOUNT FROM HI S OWN BANK A/C. THEREFORE, THE QUESTION OF UNEXPLAINED CREDIT WILL NOT COME. 69: UNEXPLAINED THE AMOUNT OF RS.78,04,58,374/- DOE S NOT INVESTMENT REPRESENT ANY INVESTMENT, IT IS THE ASSESSEE OWN MO NEY TRANSFERRED FROM OUTSIDE INDIA A/C TO INDIAN NRI A/C. THEREFORE, UNE XPLAINED INVESTMENT NOT ATTRACTS. 69A: UNEXPLAINED THE AMOUNT OF RS.78,04,58,374/- IS THE CREDIT MONEY APPEARING IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THE MONEY TRANSFERRED FROM HIS OWN FOREIGN BANK A/C TO HIS OWN NRI A/C IN INDIA. THIS WILL NOT ATTRACT UNEXPLAINED MONEY. 69C: UNEXPLAINED THIS SECTION WILL NOT ATTRACT AS N O EXPENDITURE IS EXPENDITURE INVOLVED. ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 7 OF 9 17. REFERENCE TO THE BOARD CIRCULAR BY ASSESSING OF FICER IS ALSO NOT CORRECT AS THE SAME WAS EXTRACTED AND WAS DISCUSSED IN DETA IL BY THE LD.CIT(A). ONE CANNOT QUOTE OUT THE CONTEXT TO TAKE A DIFFEREN T MEANING OF THE GENERAL CIRCULAR ISSUED BY THE BOARD. LD.CIT(A) HAVING EXAM INED THAT THE PRINCIPLES LAID DOWN BY THE BOARD CIRCULAR ARE CLEA RLY APPLICABLE TO THE FACTS OF THE CASE, WE DO NOT SEE ANY MERIT IN GROUN D NO.15 RAISED BY REVENUE UNLESS IT IS ESTABLISHED THAT ASSESSEE HAS EARNED INCOME IN INDIA OR RECEIVED IN INDIA. PROVISIONS OF SECTION 5 DOES NOT PERMIT TAXATION OF AMOUNTS REMITTED TO INDIA FROM SOURCES OUTSIDE INDI A WHICH ARE NOT INCOMES UNDER THE PROVISIONS OF THE ACT. THIS ISSUE WAS DISCUSSED ELABORATELY BY THE CO-ORDINATE BENCH IN THE CASE OF DCIT VS. FINLAY CORPORATION LTD., [86 ITD 626], DELHI, WHEREIN IT W AS HELD AS UNDER: 'THE ISSUE WHETHER THE INCOME OF NON-RESIDENT IS TA XABLE OR NOT IS STILL TO BE DECIDED WITH REFERENCE TO THE PROVISIONS OF SECTION 5(2) AND, THE PROVISIONS OF SECTION 68 OR 69 CANNOT ENLARGE THE SCOPE OF SECTION 5(2) . WHAT IS NOT TAXABLE UNDER SECTION 5(2) CANNOT BE TAXED UNDER THE PROVISIONS OF SECTION 68 OR SECTION 69 . UNDER SECTION 5(2) THE INCOME ACCRUING OR ARISING OUTSIDE INDIA IS NOT TAXABLE UN LESS IT IS RECEIVED IN INDIA. SIMILARLY, IF ANY INCOME IS ALREADY RECEIVED OUTSIDE INDIA, THE SAME CANNOT BE TAXED IN INDIA MERELY ON THE GROUND THAT IT IS BROUGHT IN INDIA BY WAY OF REMITTANCES. REFERENCE CAN BE MADE TO THE JU DGMENT OF SUPREME COURT IN THE CASE OF KESHAV MILLS LTD. V. CIT (1953) 23 ITR 230 (SUPREME COURT OF INDIA) IF SUCH INCOME IS SHOWN IN THE BOOKS OF ACCOUNT THEN IT CANNOT BE TAXED IN INDIA MERELY BECAUSE THE ASSESSEE IS UNABLE TO PROVE THE SOURCE OF SUCH ENTRY. FOR EXAMPLE, THERE MAY BE APPEARING AN ENTRY OF CASH CREDIT IN THE NAME OF A PERSON OF USA BY WAY OF LOAN THROUGH CHEQUE AND DEPOSITED IN THE BANK ACCOUNT MA INTAINED AT ANY CITY IN USA. SUCH MONEY BEING RECEIVED OUTSIDE INDIA CANNOT BE TAXED UNDER SECTION 5(2) UNLESS IT IS PROVED THAT SUCH MONEY IS RELATABLE T O THE INCOME ACCRUED OR ARISING IN INDIA. THEREFORE, THE SAME CANNOT BE TAXED UNDER SECTION 68 MERELY ON THE GROUND THAT THE ASSESSEE FAILS TO PR OVE THE GENUINENESS AND SOURCE OF SUCH CASH CREDIT. THEREFO RE, WE ARE OF THE CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 68 OR 69 WOULD BE APPLICABLE IN THE CASE OF NON-RESIDENT ONLY WITH RE FERENCE TO THOSE AMOUNTS WHOSE ORIGIN OF SOURCE CAN BE LOCATED IN INDIA. THE REFORE, THE PROVISIONS OF SECTION 68 OR 69, IN OUR OPINION, HAVE LIMITED APPLICATION IN THE CASE OF NON- RESIDENT.' 18. LIKEWISE, IN THE CASE OF SMT. SUSILA RAMASAMY V . ACIT, CENTRAL CIRCLE -II(2), CHENNAI [008 ITR (TRIB) 18 (CHENNAI) ], CHENNAI BENCH HAS HELD AS UNDER: 'A NON-RESIDENT PERSON HAVING MONEY IN FOREIGN COUN TRY COULD NOT BE CALLED UPON TO PAY INCOME TAX ON THAT MONEY IN INDI A. THE REASON IS OBVIOUS BECAUSE IN RESPECT OF THAT MO NEY IT WILL NOT BE POSSIBLE FOR THE AO TO SAY IT WAS EITHER RECEIVED B Y HIM IN INDIA, OR IT WAS DEEMED TO BE RECEIVED BY HIM IN INDIA, OR IT ACCRUE D TO HIM IN INDIA, OR IT AROSE TO HIM IN INDIA, OR IT IS DEEMED TO ACCRUE TO HIM IN INDIA, OR IT IS DEEMED TO ARISE TO HIM IN INDIA. [PARA 14.1]. IF A NON RESIDENT PERSON, HAVING MONEY IN A FOREIGN COUNTRY, BRINGS THAT MONE Y TO INDIA, THROUGH A BANKING CHANNEL, HE CANNOT BE CALLED UPON TO PAY IN COME TAX ON THAT MONEY IN INDIA, FIRSTLY, FOR THE REASONS STATED ABO VE AND SECONDLY, BECAUSE THE REMITTANCE OF MONEY INTO INDIA THROUGH BANKING CHANNEL WILL MAKE, THE ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 8 OF 9 ONUS ON THE ASSESSEE UNDER SECTION 69 , DISCHARGED. [PARA 14.2]. ONCE AN AMOUNT IS RECEIVED AS INCOME, ANY REMITTANCE OR TRA NSMISSION OF THAT AMOUNT TO ANOTHER PLACE DOES NOT RESULT IN RECEIPT ONCE AGAIN AT OTHER PLACE, WITHIN THE MEANING OF SECTION 5 . THEREFORE, IF CERTAIN INCOME, PROFITS OR GAINS WAS RECEIVED BY THE ASSESSEE OUTSIDE INDIA IT DOES NOT BECOME CHARGEABLE TO INCOME TAX IN INDIA BY REASON OF THAT MONEY HAVING BEEN BROUGHT INTO INDIA. THIS IS BECAUSE WHAT IS CHARGEA BLE IS THE FIRST RECEIPT OF THE MONEY AND NOT A SUBSEQUENT DEALING BY THE ASSES SEE WITH THE SAID MONEY. IN THAT EVENT THE MONEY IS BROUGHT BY THE AS SESSEE AS HIS OWN MONEY WHICH HE HAD ALREADY RECEIVED AND HAD CONTROL OVER IT AND IT DOES NOT TAKE THE CHARACTER OF INCOME, PROFITS AND GAINS AFTER BEING BROUGHT INTO INDIA. [PARA 14.3]. THERE COULD, OF COURSE BE A SIT UATION WHERE A NON- RESIDENT HAS MONEY IN INDIA, TRANSMITS IT TO A FORE IGN COUNTRY THEN BRINGS IT BACK TO INDIA THROUGH A BANKING CHANNEL. IF THIS CI RCULAR MOTION OF THE MONEY IS CONCLUSIVELY PROVED WITH EVIDENCE THEN THE NON RESIDENT WILL SURELY DO THE, EXPLAINING UNDER SECTION 69 , DESPITE THE MONEY HAVING BEEN BROUGHT INTO INDIA THROUGH BANKING CHANNEL. BUT MER ELY ON SUSPICIONS OR DOUBTS, CONJECTURES OR SURMISES, NO INFERENCE CAN B E DRAWN AGAINST THE ASSESSEE. IT IS TRITE LAW THAT THERE CAN BE NO PRES UMPTION IN FAVOR OF ANY ILLEGALITY OF A TRANSACTION. IN FACT THE PRESUMPTIO N IS THE OTHER WAY ABOUT. [PARA 14.4]. IN THE CASES OF REMITTANCES THROUGH BA NKING CHANNEL THE NATURE AND SOURCE OF THE FUNDS GET EXPLAINED AND THE ONUS ON THE ASSESSEE UNDER SECTION 69 GETS DISCHARGED, AND CONSEQUENTLY SUCH REMITTANCES CANNOT BE TAXED UNDER SECTION 5(2) (B). THEREFORE, THE ARGUMENT OF THE REVENUE THAT, IN THE PRESENT CASE, THE IMPUGNED MON EY WAS TAXABLE UNDER SECTION 5(2)(B) READ WITH SECTION 69 , ON THE FACTS, AS NO MERIT AND CANNOT BE ACCEPTED. [PARA 14.6]. BUT, THE POSITION WILL BE ENTIRELY DIFFERENT IF THE MONEY HAS BEEN BROUGHT INTO INDIA OTHERWISE THAN THROUGH BANKING CHANNEL, BECAUSE IN THAT CASE THE ONUS ON THE ASSES SEE UNDER SECTION 69 WILL NOT STAND DISCHARGED. IN SUCH A CASE THE PROVISIONS OF SECTION 5(2)(B) READ WITH SECTION 69 WILL SURELY BE ATTRACTED. [PARA 14. 7]. IN THE PRESENT CASE, THE AO WHILE RELYING O N THE CBDT CIRCULAR, HAS COMMITTED AN ERROR OF REPRODUCING IN HIS ORDER FROM PARA 4 OF THE CIRCULAR, WHICH DOES NOT APPLY TO THE REMITTANCES THROUGH BAN KING CHANNELS. HE SHOULD HAVE APPLIED THE PARA 2 AND FIRST PART OF PA RA 3 OF THE CIRCULAR. IN THE CIRCUMSTANCES, THEREFORE, HIS ORDER HAS NO MERIT AN D CANNOT BE SUSTAINED.[PARA 15.4]. THE ASSESSEE, WHO IS A NON R ESIDENT BROUGHT MONEY INTO INDIA THROUGH BANKING CHANNEL AND THE MANNER I N WHICH THIS MONEY WAS UTILIZED IN INDIA IS DESCRIBED IN THE ANNEXURE. IT HAS BEEN OBSERVED THAT BECAUSE OF THE MODE OF BANKING CHANNEL, ADMITT EDLY, USED FOR THE REMITTANCE IN THIS CASE, THE ONUS ON THE ASSESSEE U NDER SECTION 69 STOOD DISCHARGED, AND THEREFORE IT WAS NOT TAXABLE IN IND IA UNDER SECTION 5(2)(B) . THE CBDT CIRCULAR SQUARELY SUPPORTS THE CASE OF THE ASSESSEE. THE FACT THAT THE TRANSACTIONS AND EVENTS NARRATED IN THE AN NEXURE LOOK CURIOUS AND SUSPICIOUS MAKES NO DIFFERENCE TO THE CONCLUSIONS T HAT HAVE BEEN DRAWN IN THIS CASE, AS PER LAW. [PARA 16.2]' 19. IN VIEW OF THE LEGAL PRINCIPLES AS STATED ABOVE , PROVISIONS OF SECTION 5(2) ARE ALSO NOT APPLICABLE AS THE AMOUNT RECEIVED IS RECEIVED FROM ASSESSEE'S OWN ACCOUNT OUTSIDE INDIA AND NO INCOME HAS ACCRUED OR ARISEN IN INDIA. THESE FUNDS WERE ALSO RECEIVED THROUGH BA NKING CHANNELS WITH NECESSARY STATUTORY APPROVALS. THEREFORE, ASSESSEE HAS PROVED THE SOURCES OF RECEIPTS AND DISCHARGED THE ONUS. IT IS THE REVE NUE WHICH FAILED IN PROVING THAT THIS AMOUNT IS UNEXPLAINED INCOME OF A SSESSEE. IN VIEW OF ITA NO 449 OF 2017 MADHUSUDAN RAO LAGADAPATI HYD ERABAD PAGE 9 OF 9 THESE FACTS OF THE CASE, WE ARE OF THE OPINION THAT VARIOUS CASE LAWS RELIED BY THE REVENUE DOES NOT APPLY AND THEY ARE CLEARLY DISTINGUISHABLE. IN VIEW OF THIS, WE HAVE NO HESITATION IN UPHOLDING TH E ORDER OF THE CIT(A) AND REJECTING THE REVENUE'S GROUNDS. 20. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 5. RESPECTFULLY FOLLOWING THE SAME, WE SEE NO REASO N TO INTERFERE WITH THE ORDER OF THE CIT (A). 6. REVENUES APPEAL IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 14 TH SEPTEMBER, 2021. VINODAN/SPS COPY TO: S.NO AD DRESSES 1 ACIT, CIRCLE 16(1), 1 ST FLOOR, BLOCK-B, IT TOWERS, MASAB TANK, HYDERABAD 2 SRI MADHUSUDAN RAO LAGADAPATI, LANCO HOUSE, PLOT NO.4, SOFTWARE UNITS LAYOUT, MADHAPUR, HYDERABAD 3 CIT (A) - 4, HYDERABAD 4 PR. CIT 4,HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER